Why Man City sued the Premier League over APT rules and how it could impact 115 hearing

Manchester City have been successful in their legal challenge over the Premier League regarding the league's Associated Party Transaction rules.

City launched the legal action in a bid to overturn the APT rules they believed were 'unlawful', and learned on Monday that they have been successful after a trial over the summer.

The victory was damning against the Premier League, and is expected to lead to a change in the rules regarding sponsorships. The case was entirely separate to the current hearing infront of an independent panel where City are defending themselves in the face of 115 charges for alleged breaches of the Premier League's financial rules.

ALSO READ: Man City inflict huge defeat on 'unlawful' Premier League in APT legal challenge

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But what actually have City managed to overturn - and will it have any impact on the 115 charges hearing?

What was City's argument?

The APT rules were introduced after Newcastle's 2021 takeover, aimed to prevent sponsorship deals being agreed by associated parties that are above fair market value. City claimed the rules were against competition law, as well as claiming they were discriminatory to clubs with ties to the Gulf region and clubs that are based outside of London.

The club also were said to have claimed damages for the money they missed out on since the rules were introduced. APT rules were tightened in February this year. It is believed 12 clubs voted for it, six against and two abstained.

“Following a full review of the existing associated party transactions rules and fair market value assessment protocols, clubs agreed to a series of amendments to further enhance the efficiency and accuracy of the system,” the league said in a statement. The APT trial began in June and lasted for two weeks.

What was the verdict?

In a damning verdict, not only did the tribunal decide that the Premier League rules breached competition law and are therefore legally void, it found that the Premier League was specifically unfair in how it had applied the rules to City.

In City's statement, they listed the tribunal's findings as followed:

• The Associated Party Transaction (APT) rules have been found to be unlawful and the Premier League’s decisions on two specific MCFC sponsorship transactions have been set aside.
• The tribunal found that both the original APT rules and the current, (amended) APT Rules violate UK competition law and violate the requirements of procedural fairness.
• The Premier League was found to have abused its dominant position.
• The Tribunal has determined both that the rules are structurally unfair and that the Premier League was specifically unfair in how it applied those rules to the Club in practice.
• The rules were found to be discriminatory in how they operate, because they deliberately excluded shareholder loans.
• As well as these general findings on legality, the Tribunal has set aside specific decisions of the Premier League to restate the fair market value of two transactions entered into by the Club.
• The tribunal held that the Premier League had reached the decisions in a procedurally unfair manner.
• The Tribunal also ruled that there was an unreasonable delay in the Premier League’s fair market value assessment of two of the Club’s sponsorship transactions, and so the Premier League breached its own rules.

What happens next - can the Premier League appeal?

The Premier League claimed the result was a success of their own, and 'endorsed the overall objectives, framework and decision-making of the APT system.'

The league continued: "Moreover, the Tribunal found that the Rules are necessary in order for the League’s financial controls to be effective. The decision represents an important and detailed assessment of the APT Rules, which ensure clubs are not able to benefit from commercial deals or reductions in costs that are not at Fair Market Value (FMV) by virtue of relationships with Associated Parties."

The statement says the Premier League will continue to operate the existing APT system, 'taking into account the findings made by the tribunal.' It is thought the verdict cannot be appealed.

However, City can now claim for damages for losses after the verdict, as can other clubs for the same reasons.

What does this mean for the 115 charges?

Monday's verdict will have no bearing on the hearing currently taking place regarding the 115 charges - in the sense that they are two completely different cases being heard by two completely different authorities.

However, having proven the APT rules are unlawful, City will feel their defence in the 115 charges case is boosted, as many of the charges relate to sponsorships and whether City disguised genuine details of their revenues. While the case may not significantly influence the arbitration hearing currently ongoing around the 115 charges, any evidence of poor governing by the Premier League will help City to further their argument that an independent regulator is needed.

It has been alleged that City concealed payments made by their owner Sheikh Mansour through third parties and disguised them as sponsorship revenue, which in itself was inflated. City have denied any wrongdoing relating to the 115 charges. A decision on the 115 charges is expected in the new year.